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bigduckontax, Accountant
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Hi I plan on withdrawing my deferred pensions pots next April

Customer Question

Hi I plan on withdrawing my deferred pensions pots next April 2015 to take to Ireland in
2016 to buy a house in co. Kerry.
I have 2 deferred pensions one worth £71000 and one worth £45000 and I plan on
using these to buy a home in Ireland the following year.
I also work full time and work long hours as a care assistant and gross around £20000
annually and am 58 years old in august.
My question is will I have to pay 20% tax on my pension pots or will it be 40% on my
pension pots?
Also will I have to pay 40% tax on my regular job for the remaining year or will it still
be 20% tax code?
Thank you and kind regards,
John Lenihan.
Submitted: 2 years ago.
Category: Tax
Expert:  bigduckontax replied 2 years ago.

Hello John, I'm Keith and happy to help you with your question

 

You can withdraw you pension pots after April 2015 providing you are over 55 years of age. These will be subject to Income Tax at your marginal rate. At 20K per annum you will be in the 20% tax band for 10K of income after using your personal allowance. Of the 20% tax band you will have used 10K, leaving you 31.866K - 10K = 21.886 available at 20%. Thus of your 116K pot the balance of 84.134K will suffer tax at 40%. There is a further complication as if you have other sources of income this may push you over the 100K income limit beyond which you loose 1 pound of personal allowance for every 2 pounds of income over the limit. You might be well advised to stagger the payment over 2 tax years to preclude this reduction. Please be aware that as yet the legislation for this is in the Finance Bill, 2014 which can still be amended as it passes through its Commons stages.

 

One way or the other you may be liable to higher rates tax. As yet the Chancellor is silent as to the 15/16 tax rates, but be careful as the Government clearly has a policy of squeezing the tax bands in successive year

 

I suggest that you seek local, trusted advice form an accountant with a view to mitigating your possible liability.

bigduckontax, Accountant
Category: Tax
Satisfied Customers: 3117
Experience: FCCA FCMA CGMA ACIS
bigduckontax and other Tax Specialists are ready to help you
Expert:  bigduckontax replied 2 years ago.
Thank you for your excellent support.
Customer: replied 2 years ago.

Could you please tell me how I would be taxed on just £45000 one year and how much for £71000 tax the following year please.
Thank you and kind regards,
John Lenihan.

Expert:  bigduckontax replied 2 years ago.
In round figures of the order of:

Again, assuming same income from job, GBP 15627 on an income of 55K.

Ditto, 26027 on 81K.

Remember data for 15/16 has yet to be determined by the Commons.

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